Serinus Announces 2014 Year End Reserves

CALGARY, ALBERTA--(Marketwired - March 18, 2015) - Serinus Energy Inc. ("Serinus", "SEN" or the "Company") (TSX:SEN)(WARSAW:SEN) is pleased to report the results of the year-end evaluation of its oil and gas reserves. The evaluation was prepared by RPS Energy Canada Ltd. ("RPS") in accordance with Canadian National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities, and includes the reserves in Serinus' Ukraine licences, and in its Tunisian properties.

All of the reserves volumes as well as the net present values attributed to the Ukraine Reserves disclosed herein, refer to Serinus' 70% effective ownership interest in the assets though its 70% indirect ownership in KUB-Gas LLC ("KUB-Gas"), which owns and operates the five licence areas in northeast Ukraine. For Total Company figures, those aggregate values are also based on 70% interest in the Ukraine assets.

Company Reserves - Using Forecast Prices

2014

2013

Oil/
Liquids

Gas

BOE

Oil/
Liquids

Gas

BOE

YoY Change

(Mbbl)

(MMcf)

(Mboe)

(Mbbl)

(MMcf)

(Mboe)

(%)

Ukraine (70% SEN Working Interest)

Proved

Producing

63

12,452

2,139

75

17,094

2,924

-27%

Non-Producing

22

4,296

738

26

3,538

616

20%

Undeveloped

21

2,800

488

33

7,154

1,225

-60%

Total Proved (1P)

106

19,548

3,364

134

27,787

4,765

-29%

Probable

215

25,599

4,482

234

24,411

4,302

4%

Total Proved & Probable (2P)

321

45,147

7,846

368

52,198

9,067

-13%

Possible

359

28,662

5,136

487

38,090

6,835

-25%

Total Proved, Probable & Possible (3P)

680

73,809

12,981

854

90,288

15,902

-18%

Tunisia

Proved

Producing

1,602

3,059

2,112

1,606

3,993

2,271

-7%

Non-Producing

402

1,740

692

32

234

71

875%

Undeveloped

1,066

2,478

1,478

1,064

2,009

1,399

6%

Total Proved (1P)

3,070

7,277

4,283

2,702

6,236

3,742

14%

Probable

5,266

12,704

7,383

5,580

12,939

7,736

-5%

Total Proved & Probable (2P)

8,336

19,981

11,666

8,282

19,175

11,478

2%

Possible

9,606

22,323

13,327

9,275

18,822

12,412

7%

Total Proved, Probable & Possible (3P)

17,942

42,304

24,993

17,557

37,996

23,890

5%

TOTAL COMPANY

Proved

Producing

1,665

15,512

4,250

1,681

21,087

5,195

-18%

Non-Producing

424

6,036

1,430

58

3,772

687

108%

Undeveloped

1,086

5,278

1,966

1,097

9,163

2,624

-25%

Total Proved (1P)

3,176

26,825

7,647

2,836

34,023

8,507

-10%

Probable

5,481

38,303

11,865

5,814

37,350

12,038

-1%

Total Proved & Probable (2P)

8,657

65,128

19,511

8,650

71,373

20,545

-5%

Possible

9,965

50,985

18,463

9,762

56,912

19,247

-4%

Total Proved, Probable & Possible (3P)

18,622

116,114

37,974

18,411

128,284

39,792

-5%

Note: Serinus reports in US dollars. All dollar amounts referred to herein are in USD, unless specifically noted otherwise.

2014 was a challenging year for Serinus and the petroleum industry in general. For the industry, the big issue was the collapse in oil prices. The price of Brent Crude fell from $115/bbl in June 2014, to $55.76/bbl on December 31. During January 2015, it fell further to almost $45/bbl before finding some strength and has been recently trading in a range around $60/bbl. This has reduced profitability for the entire industry, and caused significant changes in the economic value, and in some cases, the economic viability of reserves and resources.

Serinus was also subject to the difficulties stemming from the unrest in eastern Ukraine during 2014 and continuing today. The conflict prevented the Company from performing all of its planned capital programs, and the increase in the royalty rate from 28% to 55% significantly affected the value for all producers in the country as well as the amounts of economically recoverable reserves.

Total corporate reserves fell in all three categories (1P, 2P and 3P) compared to their corresponding values at year end 2013. There were however, markedly different results between Ukraine and Tunisia, the two countries in which the Company's reserves are located.

Tunisia

In Tunisia, 1P, 2P and 3P reserves increased 14%, 2% and 5% respectively. The Company achieved increases from its 2014 drilling and workover programs, which were partially offset by negative economic and technical revisions. The major increases resulted from:

The success of the Winstar-12bis well. Winstar-12bis targeted nearly 2 MMbbl of gross probable reserves, plus associated gas. The well has exceeded expectations: it was put on production on December 10, 2014 at an initial rate of 635 boe/d, and through subsequent clean up and opening of the choke, has average over 1,000 boe/d for 2015 to date.

Better than expected performance from the CS-1 and CS-3 wells.

The negative technical revisions occurred principally in the Zinnia concession where much of the reserves were reclassified to Contingent Resources due to the lack of planned activity. The economic revisions were due substantially to the lower oil price forecast causing production to reach its economic limit sooner.

Ukraine

Reserves in Ukraine declined by 29% (1P), 13% (2P) and 18% (3P) compared to year end 2013. As mentioned above, the unrest in eastern Ukraine prevented the Company from performing much of its planned drilling, workover and stimulation programs. The major revisions to reserves include among other things:

Upward net technical revisions in the Olgovskoye and Makeevskoye fields due to better performance than had previously been expected.

All reserves in the Krutogorovskoye and Vergunskoye fields were reclassified to Contingent Resources as both are located in rebel controlled areas and in Force Majeure

Undeveloped reserves in the S6 zone in the O-11 well were revised downward after it was found to be wet. The well still has proved non-producing reserves in the R30c formation.

The capital program not done or completed included:

Three wells were not drilled including the M-15 appraisal well, and the NM-4 and M-22 exploration wells. (M-22 was spud in the fourth quarter, but results were not available in time for it to be included in the 2014 year end reserves)

Four stimulations on O-11, O-15, NM-3 and M-17 (S7) were not performed.

Several workovers and dual completions were also not performed.

Net Present Value - After Tax, Using Forecast Prices

2014

2013

0%

10%

15%

0%

10%

15%

YoY Change

(US$ millions)

(US$ millions)

Ukraine (70% SEN Working Interest)

Proved

Producing

35.6

30.8

28.6

107.8

86.5

78.9

-64%

Non-Producing

7.4

4.8

3.9

17.0

13.9

12.6

-65%

Undeveloped

1.1

(0.5

)

(0.8

)

20.7

10.8

7.7

-105%

Total Proved (1P)

44.1

35.1

31.7

145.5

111.2

99.2

-68%

Probable

78.7

42.3

33.4

168.0

87.1

68.5

-51%

Total Proved & Probable (2P)

122.8

77.4

65.1

313.5

198.3

167.7

-61%

Possible

111.0

46.0

33.3

296.4

122.1

88.9

-62%

Total Proved, Probable & Possible (3P)

233.8

123.4

98.3

609.9

320.4

256.6

-61%

Tunisia

Proved

Producing

27.2

27.2

26.5

63.1

55.9

52.6

-51%

Non-Producing

19.0

15.4

13.7

(0.9

)

(0.4

)

(0.3

)

nm

Undeveloped

36.3

18.4

13.4

39.7

22.2

17.1

-17%

Total Proved (1P)

82.5

60.9

53.6

101.9

77.7

69.4

-22%

Probable

216.3

97.0

73.4

271.9

129.7

100.0

-25%

Total Proved & Probable (2P)

298.8

157.9

127.0

373.8

207.5

169.4

-24%

Possible

432.7

140.2

98.6

459.1

137.8

94.9

2%

Total Proved, Probable & Possible (3P)

731.5

298.1

225.6

832.9

345.3

264.3

-14%

TOTAL COMPANY

Proved

Producing

62.7

58.0

55.1

170.9

142.4

131.5

-59%

Non-Producing

26.4

20.2

17.6

16.1

13.5

12.3

50%

Undeveloped

60.5

17.9

12.6

60.4

33.0

24.8

-46%

Total Proved (1P)

126.6

96.0

85.3

247.4

188.9

168.6

-49%

Probable

295.0

139.3

106.8

439.9

216.8

168.5

-36%

Total Proved & Probable (2P)

421.6

235.3

192.1

687.3

405.8

337.1

-42%

Possible

543.7

186.2

131.8

755.5

259.9

183.8

-28%

Total Proved, Probable & Possible (3P)

965.3

421.5

323.9

1,442.8

665.7

520.9

-37%

Net present values for Serinus' reserves declined by 49%, 42% and 37% for 1P, 2P and 3P reserves respectively. The major contributing factors to those declines were:

The reserve volume declines as discussed above

The drop in oil prices

The increase in royalty rates imposed on oil and gas production by the Ukraine government

The devaluation of the Ukraine hryvnia

As for the reserve volumes, there were significant differences in how these factors affected the values in each of Tunisia and Ukraine.

Tunisia

The decline in oil prices significantly outweighed the reserves volume increases that Serinus was able to achieve in 2014. In comparison to the forecast for Brent crude used in last year's reserves evaluation, prices are 30% and 22% lower for 2015 and 2016 respectively. In the medium to longer term, the new forecast only recovers to 93% of that used for the 2013 evaluation.

The drop in oil prices has an effect on Tunisian gas prices as well. In general, gas in Tunisia is priced as an equivalent to low sulphur heating oil, which in turn, will fluctuate with oil prices.

Ukraine

The drop in oil prices did not have as direct an effect on the Company's Ukraine assets as in Tunisia. Serinus' production in Ukraine is 98% natural gas, and gas prices in the country are set based on the price of imported gas from Russia. Russia has not reduced its price significantly, and has recently indicated a reluctance to sell gas to Ukraine at all.

The larger effect on realized prices was the devaluation of the hryvnia from 8.2 UAH/USD in January 2014 to 15.7 UAH/USD in December. It has since fallen to 31 UAH/UD before recovering to a range of 23-24 UAH/USD after the announcement of funding from the IMF.

Between the lower world prices and the currency devaluation, the new gas price forecast for Ukraine is 25% below last year's in 2015, and recovers only to 82% of the previous forecast in the longer term.

The more significant impact on the value of the Company's Ukraine reserves came from the increase in royalties to 55% and 45% for natural gas and oil/liquids respectively (previously 28% and 42%) effective August 1, 2014. This was first passed as a temporary measure, due to expire in January 2015. Those rates were made permanent on January 1, 2015.

Finding and Development Costs

Finding and Development Costs, excluding Acquisitions

Total Proved Reserves

Total Proved & Probable Reserves

3 Year

3 Year

2014

2013

2012

Total

2014

2013

2012

Total

Exploration and Development Costs

(M$)

67,453

75,560

57,361

200,374

67,453

75,560

57,361

200,374

Net Change in Future Development Costs

(M$)

(22,647

)

(21,003

)

24,540

(19,110

)

(22,597

)

(21,003

)

24,540

(19,060

)

Total Finding & Development Costs

(M$)

44,806

54,557

81,901

181,264

44,856

54,557

81,901

181,314

Reserve Additions (excluding acquisition)

(Mboe)

1,075

914

1,786

3,775

978

1,399

3,867

6,245

Finding & Development Costs

($/Boe)

$41.68

$59.68

$45.86

$48.02

$45.85

$38.99

$21.18

$29.04

Finding, Development and Acquisition Costs

Total Proved Reserves

Total Proved & Probable Reserves

3 Year

3 Year

2014

2013

2012

Total

2014

2013

2012

Total

Exploration and Development Costs

(M$)

67,453

75,560

57,361

200,374

67,453

75,560

57,361

200,374

Acquisition/Disposition Costs

(M$)

-

99,518

-

99,518

-

99,518

-

99,518

Net Change in Future Development Costs

(M$)

(22,647

)

8,897

24,540

10,790

(22,597

)

36,637

24,540

38,580

Total Finding & Development Costs

(M$)

44,806

183,975

81,901

310,682

44,856

211,715

81,901

338,472

Reserve Additions

(Mboe)

1,075

4,656

1,786

7,517

978

12,783

3,867

17,629

Finding & Development Costs

($/Boe)

$41.68

$39.51

$45.86

$41.33

$45.85

$16.56

$21.18

$19.20

Reserve Evaluator Price Forecasts

RPS used the following commodity price forecasts in preparing its evaluation of Serinus' oil and gas properties.

Ukraine

Tunisia Gas

Brent

Condensate

Gas

Sabria

Chouech

(US$/Bbl)

(US$/Bbl)

($/Mcf)

($/Mcf)

($/Mcf)

2015

70.03

56.87

8.43

9.74

10.32

2016

74.64

60.61

8.34

10.38

11.00

2017

79.50

64.55

8.58

11.06

11.72

2018

84.50

68.61

8.82

11.76

12.45

2019

89.50

72.67

9.07

12.45

13.19

2020

93.85

76.20

9.26

13.06

13.83

2021

95.72

77.73

9.44

13.32

14.11

2022

97.64

79.29

9.63

13.58

14.39

2023

99.59

80.87

9.82

13.86

14.68

2024

101.58

82.49

10.02

14.13

14.97

2025

103.61

84.14

10.22

14.42

15.27

2026

105.69

85.82

10.43

14.70

15.58

2027

107.80

87.53

10.63

15.00

15.89

2028

109.96

89.29

10.85

15.30

16.21

2029

112.16

91.07

11.06

15.60

16.53

2030

114.40

92.89

11.29

15.92

16.86

2031

116.69

94.75

11.51

16.24

17.20

2032

119.02

96.65

11.74

16.56

17.54

2033

121.40

98.58

11.98

16.89

17.89

Abbreviations

bbl

Barrel(s)

bbl/d

Barrels per day

boe

Barrels of Oil Equivalent

boe/d

Barrels of Oil Equivalent per day

Mcf

Thousand Cubic Feet

Mcf/d

Thousand Cubic Feet per day

MMcf

Million Cubic Feet

MMcf/d

Million Cubic Feet per day

Mcfe

Thousand Cubic Feet Equivalent

Mcfe/d

Thousand Cubic Feet Equivalent per day

MMcfe

Million Cubic Feet Equivalent

MMcfe/d

Million Cubic Feet Equivalent per day

Mboe

Thousand boe

Bcf

Billion Cubic Feet

MMboe

Million boe

Mcm

Thousand Cubic Metres

UAH

Ukrainian Hryvnia

USD

U.S. Dollar

CAD

Canadian Dollar

Cautionary Statement:

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Test results are not necessarily indicative of long-term performance or of ultimate recovery. The test data contained herein is considered preliminary until full pressure transient analysis is complete.

About Serinus

Serinus is an international upstream oil and gas exploration and production company that owns and operates projects in Ukraine, Tunisia, and Romania.

Translation: This news release has been translated into Polish from the English original.

Forward-looking Statements: This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.